Pa. AG Sues 16 Including Attorneys Over Alleged Widespread ‘Living Trust’ Sales Scam

Pennsylvania Attorney General Jerry Pappert has filed a civil lawsuit in Commonwealth Court accusing 16 defendants of engaging in an elaborate statewide living trust sales scheme, that deceived older Pennsylvanians into purchasing revocable living trusts, long-term annuities or charitable gift annuities that were costly, not in their best interest and/or unnecessary. The alleged victims documented approximate losses that range between $1,800 and $80,000.

Along with the complaint, Pappert filed a preliminary injunction seeking to ban the defendants from engaging in the unlawful advertising, promotion or sale of estate planning products or services in Pennsylvania. The lawsuit and preliminary injunction followed a nine-month investigation by agents from Pappert’s Charitable Trusts and Organizations Section.

“This alleged scheme was heavily promoted and potentially hurt hundreds of senior citizens across the Commonwealth who may be unaware that they were cheated,” Pappert said. “Today, I’m asking the court to ban the defendants from engaging in the illegal advertising, promotion and sale of estate planning products or services in Pennsylvania.”

Pappert identified the defendants as:
— Estate Planning Advisors Corp. (EPAC), 525 West Chester Pike,
Havertown, Delaware County.
— Ben Consulting Corp. (BCC), 525 West Chester Pike, Havertown, Delaware County.
— Funding & Financial Services Inc. (FFS), 525 West Chester Pike,
Havertown, Delaware County.
— Brian J. Newmark of 913 N. Spring Mill Rd., Villanova, Delaware
County, and president of EPAC, BCC and FFS.
— Barry O. Bohmueller, Esquire, 900 East 8th Ave., Suite 300, King of
Prussia, Montgomery County, and represented by EPAC, BCC and FFS.
— Brett B. Weinstein, Esquire, 900 East 8th Ave., Suite 300, King of
Prussia, Montgomery County, and represented by EPAC, BCC and FFS.
— John Wight of 491 South 9th Street, Quakertown, Bucks County, and employee of defendants Newmark, Bohmueller and Weinstein.
— Victoria Larson of 332 Washington Place, Wayne, Chester County, and employee of Newmark, Bohmueller and Weinstein.
— Glenn Larson of 378 Lehigh Ave., Palmerton, Carbon County and employee of Newmark, Bohmueller and Weinstein.
— Brett Marcus of 1239 Oakland Terrace Rd., Arbutus, Maryland, and
employee of Newmark, Bohmueller and Weinstein.
— Kenneth Krygowski of 1113 Woodstock Lane, West Chester, Chester County, and employee of Newmark, Bohmueller and Weinstein.
— Steven Strope of One Joac Circle, Royersford, Montgomery County, and employee of Newmark, Bohmueller and Weinstein.
— New Life Corporation of America, doing business as National Community Foundation, 10 West Park Dr., Brentwood, Tennessee, and represented by Newmark, EPAC, BCC and FFS.
— American Investors Life Insurance Company Inc. (AILIC), 555 South
Kansas Ave., Topeka, Kansas, and represented by Newmark, EPAC, BCC and FFS.
— AmeRus Annuity Group Company (AAG), 555 South Kansas Ave., Topeka, Kansas, corporate parent and owner of AILIC, represented by Newmark, EPAC, BCC and FFS.
— AmeRus Group Company (AGC), 699 Walnut St., Des Moines, Iowa, and corporate parent and owner of AAG represented by Newmark, EPAC, BCC and FFS.

The seven-count complaint accuses the various defendants of violating Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, Solicitation of Funds for Charitable Purposes Act, Telemarketer Registration Act, as well as the Judicial Code Provisions barring the Unauthorized Practice of Law.

According to investigators, defendants Bohmueller and Weinstein between 2001 and 2004 promoted their estate planning services using telemarketing, newspaper ads, mass mailings, senior expos and local seminars held in restaurants, country clubs, synagogues or other facilities throughout the state. The attorneys used sales agents from the marketing, insurance or brokerage firms to sell the estate planning products. The sales efforts were primarily focused on consumers located in Central, Northeastern and Southeastern Pennsylvania. Those responding to the ads or promotions were typically senior citizens often 70 to 80 years old.

According to the lawsuit, the defendants encouraged consumers to meet with their “Estate Planning Advisors” or “Certified Senior Advisors” to explain “What Everyone Should Know About Estate Planning Techniques, Financial Planning Strategies and Estate Preservation.” The promotional materials from the defendants’ estate planning advisor companies led consumers to believe that they were receiving impartial estate planning advice.

The complaint claims that consumers who attended the presentations or allowed the defendants into their homes were advised to purchase a revocable living trust. The trust was allegedly presented as an estate planning document that was in the consumers’ best interest, regardless of their individual financial holdings. Many were sold living trust kits for approximately $1,800 whether they needed them or not. Consumers said they were unaware that the sales representatives were insurance agents who received sales commissions.

“In reality, the individuals advising consumers about estate planning products are not unbiased legal professionals but sales or insurance agents working on commissions,” Pappert said. “These older citizens were given legal advice from non-attorneys who intentionally steered them toward purchasing living trusts as a way to find out the contents of their financial portfolios. After profiling the portfolios, the defendants deceptively convinced consumers to convert their stocks or other non-real estate investments into charitable gift annuities or long-term deferred annuities that paid the agents even higher commissions.”

The defendants, among other charges, are accused of knowingly providing legal advice and services that can only be lawfully performed by licensed attorneys.

Pappert said undercover agents from his Charitable Trusts and Organizations Section posed as potential customers and presented the various defendants with a dummy portfolio. Even though the bogus investments paid generous dividends and interest, the defendants recommended that the entire portfolio be liquidated and converted to deferred annuities, according to Pappert.

Pappert said several consumers told his office that they lost thousands of dollars in their life savings due to the failure to realize the promised returns, extra fees or costs, additional tax expenses and the inability to have access to their investments without paying huge penalties.

The Commonwealth also claims that the sales representatives for New Life Corporation were not registered and bonded as professional solicitors, in violation of the Charities Act. Additionally, defendant Weinstein is accused of violating a November 2001 agreement with the Office of Attorney General involving similar alleged illegal business practices.

Topics Lawsuits Agencies Pennsylvania Kansas Delaware